What is the purpose of a Cost of Living Rider in life insurance?

The purpose of a Cost of Living Rider in life insurance is to increase death benefits in line with inflation. This rider is designed to protect the policyholder's beneficiaries from the eroding impact of inflation on the purchasing power of the death benefit amount. As the cost of living rises over time, the rider adjusts the death benefit accordingly, ensuring that it maintains its value and can adequately provide for the beneficiaries when the claim is eventually made. This feature is particularly important in a long-term policy, where the initial death benefit could become less sufficient due to inflation over the years.

The other options, while relevant to various aspects of life insurance, do not pertain to the Cost of Living Rider. For instance, providing tax benefits upon policy surrender relates to how policy values may be taxed, while allowing early access to benefits for chronic illnesses addresses a different rider type aimed at providing immediate financial relief. The option regarding adding premiums without verification deals with policyholder flexibility, which is not the focus of the Cost of Living Rider.